Pharma stocks fall 40% in 2 months

MUMBAI, MAY 1: Investors, if you think that ICE companies are the only major losers in the recent bear run, it’s wrong. Shares of pharmaceutical companies have taken a severe whipping with most of them falling nearly 40 per cent in the last two months.

According to dealers, the fall in pharma shares has mostly gone unnoticed amidst the hype over ICE companies. Glaxo had fallen by 40 per cent Rs 384 from mid-February, Hoechst Marion by 64 per cent to Rs 398 and Parke-Davis by 37.2 per cent to Rs 248.35. The fall has been steeper than the decline in the BSE Sensex which ended at 4,657.55 on Friday, which is about 24 per cent off its mid-February peak of 6,150.69.

One reason cited by brokers for the sustained fall in pharma shares is the neglect of the pharma sector by Finance Minister Yashwant Sinha in the Union budget. While the pharma industry had hoped for a host of concessions — especially for the R&D segment — investors and dealers built up stock positions in pharma shares ahead of the budget. With the budget belying the expectations of investors, the hammering started.

“Pharma stocks had a dream run in 1998-99. Many stocks hit their all-time high levels during this period. The current bear phase in pharma stocks may be a cycle. This is one industry which cannot see any drop in demand,” said an analyst.